The New iPad: Apple Fever Hits Suppliers

On Wednesday, Tim Cook unveiled the new iPad at a special press event in San Francisco. Apple’s (NASDAQ:AAPL) latest tablet will be known simply as “The new iPad.” It comes equipped with a 2048 x 1536 retina display and will work with new high-speed 4G LTE networks. Although Apple shares traded lower after the press event, many suppliers and companies related to Apple received a boost as Apple fever took hold of the markets.

The new iPad, which will be available in the United States on March 16, will not support 3G. However, it will support 4G LTE, which will allow users to connect at speeds nearly 10 times faster than current 3G data networks. “The performance is amazing and you’re going to love using it on these high-speed new networks,” said Philip Schiller, Apple’s senior vice president of worldwide marketing. The new 4G LTE network will be available for the iPad from Verizon (NYSE:VZ) and AT&T (NYSE:T). Verizon has the largest LTE network available. “It is great news for Verizon,” said Credit Suisse analyst Jonathan Chaplin. “They have a great LTE network that is empty, so they can afford to fill it up.” Shares of both Verizon and AT&T climbed higher on Wednesday. The new iPad models capable of 4G LTE speeds will begin at $629, while Wi-Fi only models begin at $499.

Stocks of other major suppliers such as Qualcomm Inc. (NASDAQ:QCOM) and Broadcom Corp. (NASDAQ:BRCM) also received a boost on Wednesday. Qualcomm supplies the baseband processor for Apple’s iPhone 4S and has 10 percent total Apple exposure. Recently, the company raised its dividend by 16 percent and announced a $4 billion share buyback program. Meanwhile, Broadcom has 13 percent total Apple exposure and was a supplier for both the original iPad and iPad 2. Although Qualcomm Inc. and Broadcom Corp. have been used by Apple in the past, investors should keep in mind that they are not guaranteed suppliers to the new iPad. Suppliers of the new iPad will not be fully known until it is disassembled by inquiring minds. On Wednesday, Qualcomm Inc. shares closed 1.88 percent higher, while Broadcom Corp. finished 2.9 percent higher.

With shares surging nearly 9 percent on Wednesday, Neonode Inc. (NEON) is one of the biggest gainers from the new iPad. At the end of February, the company claimed it was awarded a touch and swipe gesture patent by the U.S. Patent and Trademark Office. The company does not currently supply Apple with its technology, but speculation continues to build that it might in the future. Neonode currently has licensing deals with Sony Corp. (NYSE:SNE) and Barnes & Noble Inc. (NYSE:BKS). Shares of Nuance Communications Inc. (NASDAQ:NUAN) also jumped 2.6 percent on Apple fever and a takeover deal. The company recently announced it will purchase rival Transcend Services Inc. (NASDAQ:TRCR) for about $300 million in cash. Nuance provides the technology that powers Siri, however, the popular voice recognition found in the iPhone 4S will not be in the new iPad. Instead, the new tablet will contain a “you talk it types” feature called Dictation.

Apple controls 73 percent of the tablet market and none of its Android-based (NASDAQ:GOOG) competitors holds more than a 5% share, according to a report from Forrester Research, reported Bloomberg. The report said Amazon (NASDAQ:AMZN) and Barnes & Noble’s may battle for second place and listed Samsung, Sony and Toshiba among companies making incremental improvements to tablets but not cutting into Apple’s share. Shares of Apple Inc. closed at $530.69 on Wednesday.